The fund said it would return money to investors as it was the logical and prudent way forward to avoid incurring further losses, according to a letter to fund investors seen by the Post. Genesis suffered an unprecedented withdrawal of about 19 per cent of its fund in the first few weeks this month.
“We made big mistakes in the recent sharp Nikkei and Hong Kong moves, which went in opposite directions,” Chua Soon Hock, founder and chief investment officer, said in the letter. “I am astounded by the incredible Nikkei-Hang Seng spread that priced Chinese versus Japanese stocks at the same value as in 1991, despite current economic realities.”
The firm declined to comment. Chua did not immediately reply to a phone call and text message for comment. Bloomberg reported the fund’s closure earlier on Tuesday.
Singapore hedge fund eyes ‘big upside’ in Chinese stocks after four-year slump
Singapore hedge fund eyes ‘big upside’ in Chinese stocks after four-year slump
“We made another mistake by trying to pick the bottom of the Hang Seng and the Hang Seng Tech indices,” he said in the letter to investors. “I still do not understand the inconsistency of China policymakers not fighting against deflation, leading to the continued loss of market confidence and prolonged bear market.”
Investors have turned bearish on Chinese equities as soon as the nation’s post-Covid recovery ran out of steam early last year. Foreign funds have pulled out more than 217 billion yuan (US$30.4 billion) from onshore-listed stocks over the past six months, while Beijing dithered about injecting more forceful stimulus or overturning its “three red lines” policy that has stoked US$100 billion of bond defaults among property developers.
Goldman Sachs said in a note to clients on Monday that the past three years were no doubt “a challenging and frustrating period” for investors and market participants in Chinese equities.
China’s Premier Li Qiang orders measures to halt market rout
China’s Premier Li Qiang orders measures to halt market rout
Chinese stocks have suffered from a 61 per cent drawdown of funds by investors over the period, accompanied by a 30 per cent drop in total market capitalisation of stocks listed on the mainland, Hong Kong and the US, Goldman said.
Market valuation has also eroded by 56 per cent in terms of price-earnings multiple and fundraising across markets in Hong Kong and China markets has shrunk by 58 per cent, the US investment bank added.
“I have reached the stage whereby my confidence as a trader is lost,” Chua told investors in the letter on its immiment closure.
“The recent tough trading – October, November, December 2023 followed by a disastrous January 2024 – has proven that my past experience is no longer valid and instead, is working against me,” he added. “I have lost my knowledge, trading and psychological edge.”